ValueClick Inc. (VCLK) is set to announce its third quarter results on Oct 27. We expect the company to report in-line third quarter results, if not higher than the guidance, due to the continued deterioration in the lead generation business.   Headquartered in Westlake Village, California, ValueClick is a diversified provider of Internet advertising solutions and online marketing services for online advertisers and website publishers.   ValueClick directly competes only with Marchex (MCHX) for placing web advertisements on affiliate networks. However, large Web portals such as Google (GOOG), Yahoo! (YHOO) and MSN continue to increase competition for ValueClick’s display ad business. Over the long-term, we are very positive on online advertising growth; however, current economic conditions are creating significant headwinds for ValueClick and others in the industry. We have a neutral rating on ValueClick.   Revenue Outlook   For the third quarter, the company expects ...

Headquartered in Westlake Village, California, ValueClick Inc. (VCLK) is a diversified provider of Internet advertising solutions and online marketing services for online advertisers and website publishers.

ValueClick is one of the largest online display advertising network operators in the industry. We believe the rebound in the company’s Comparison Shopping and Search segment and positive display ad trends in the U.S. will drive growth in the near-term.   The company’s second quarter earnings were above expectations, demonstrating its focus on driving bottom-line growth. However revenue was down year over year in the most recent quarter, impacted negatively by weakness in the lead generation business, which pulled down the Media segment’s revenue significantly. The lead generation business continues to deteriorate and has been taken into account in the subdued outlook for the third quarter.   ValueClick directly competes only with Marchex (MCHX) for placing web advertisements on affiliate networks. Moreover large

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We maintain a Hold rating on the shares of ValueClick, Inc. (VCLK), a Westlake Village, California-based online marketing services company.

VCLK is currently trading at a P/E multiple of 13.5x our 2008 earnings per share estimate of $0.71, a discount to the industry median. Although over the long-term we are very positive on online advertising growth, current economic conditions are creating significant headwinds for ValueClick and others in the industry.

Rising energy prices and falling housing prices have caused consumer confidence to drop, and consumer spending has fallen as a result. With decreased consumer spending, advertisers are cutting back budgets. This has caused what we consider a cyclical decline in Internet advertising dollars.

Although there is likely upside to VCLK shares over the longer-term, we believe it is too early to get involved with the stock for our six month time frame. We lower our target price to $10.00, a multiple

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